On 18 March 2021, the Court of Justice of the European Union (CJEU) handed down a favourable judgment for Polish taxpayers (C-895/19) regarding VAT on intra-Community acquisitions of goods (IC-a). I have already informed about the ruling in the blog post „Favourable CJEU ruling on turnover tax on intra-Community acquisition of goods” in April this year, in which I analysed in detail the essence of the dispute between the taxpayer and the director of the National Tax Chamber (KIS). After the publication of the justification of the CJEU judgment in May 2021, taxpayers began to file applications for acknowledgment of overpayment an masse in order to be on time before 9 June 2021, as on that day the deadline for filing the application together with the overpayment interest due expired. It is worth remembering that the expiry of this deadline, however, does not close the way to recover the interest paid on the untimely filed IC-a.
Further work is underway on the amendment of the VAT Act with regard to the introduction of e-invoices to legal transactions. We have already reported on the ongoing consultations in this area in our blog post “New e-invoices – structured invoices and the National System of e-invoices“. E-invoices will serve to further tighten the tax system and prevent tax fraud.
After lengthy consultations on the introduction of changes to the Labour Code, a draft act amending the Act – Labour Code, the Act on Vocational and Social Rehabilitation and Employment of Persons with Disabilities and the Act on Employment Promotion and Labour Market Institutions was submitted to the Government Legislative Centre. Although the draft was submitted to the Government Legislative Centre in May, and its content was significantly modified in July, the draft is currently at the opinion stage. The bill is primarily a response to the recently widespread form of home office work and the need for increased health protection for workers in relation to COVID-19.
The Director of the National Tax Information (KIS), in an individual interpretation issued on 26 June 2021, confirmed the position of a taxpayer regarding the possibility to treat as tax deductible expense the expenses incurred for remuneration of CEO of a company and, at the same time, its shareholder, under a contract for work concluded with him.
On 1 July 2021, new requirements for VAT settlement in JPK_V7 came into force. The exception are regulations related to the e-commerce package and the obligation to mark in the sales register the date of payment or the date of payment in the bad debt relief, which come into force on 1 January 2022.
Tax authorities are not entitled to make apparent use of the regulation which allows for suspension of the limitation period or for its non-initiation in the case of commencement of penal fiscal proceedings (art. 70 § 6 item 1 of the Tax Ordinance Act). Additionally, a taxpayer must be notified of this fact and the suspicion of a crime or offence must result from his failure to fulfil a tax liability. Unfortunately, in practice, there is a frequent abuse of the law by the tax authorities, consisting in the initiation of penal fiscal proceedings in the case of a tax offence only for the appearance’s sake, to extend the time for completion of tax proceedings.
Situations related to a tax inspection generally arouse fear and apprehension among taxpayers just after receiving a notice of the intended tax inspection. Indeed, a tax inspection is a procedure that goes far beyond the scope of verifying activities, whereby the tax authority, as a rule, verifies the timeliness and correctness of filed returns and paid taxes.
On the grounds of the amendment of the Corporate Income Tax Act on 30 November 2020, limited partnerships have been subject to CIT. The form of conducting business according to the rules, when the limited partner was usually a natural person with a significantly limited scope of personal liability and the general partner was a limited liability company (sp. z o. o. sp. k.), whose liability was limited to the amount of equity, has been forgotten.
On 26 May 2021, as a result of the lack of compromise on some crucial points of the draft agreement, the Swiss authorities decided not to sign the institutional agreement with the European Union. Thus, the negotiations between the European Union and Switzerland ended in failure and the institutional agreement aimed at secured Switzerland’s barrier-free access to the EU internal market and enabling its expansion was not signed.
The CJEU in the judgment issued on 15 April 2021 indicates that penalties concerning irregularities in VAT settlements must take into account of all the circumstances of the case. They cannot be applied where it is impossible to estimate the negative effects of an action and without verifying the intentions of the taxpayer. Penalties are intended to prevent fraud and tax offences, and therefore cannot be an expression of oppressive treatment of entrepreneurs by the state authorities.